Definition

churn (agitation or turnover)

In a general context, churn is a synonym for agitation or turnover. The term derives from a dairy procedure that results in butter (one agitates cream in a wooden container; churn is the word for both the container and the process), but is often used to refer to something that is turning over, either literally or figuratively. In a business context, it generally refers to customer or employee turnover, and especially attrition. The rate of attrition, known as the churn rate, is an important business metric.

Churn is frequently spoken of in a communications context, where it refers to the tendency of Internet and cell-phone subscribers to switch providers. The most common reasons for churn are dissatisfaction with an existing provider, the lure of a lower price for equivalent service from a different provider, and the lure of better service for the same price from a different provider. Churn can also result from a change in the subscriber's geographic location, the desire for increased connection speed, or a need for different or enhanced cell-phone coverage.

Churn can be a problem for some providers, particularly those whose services employ substantial hardware at the subscriber site. Satellite Internet service providers are a good example of this. In order to lure and retain customers, such firms may offer free installation (which normally costs several hundred dollars), free hardware, free programs, and free system upgrades. A firm may also require a customer to sign a contract that imposes a penalty if the subscriber does not stay with the service for the prescribed length of time.

This was last updated in September 2005
Posted by: Margaret Rouse

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